“The government has used its budget, as can be seen in the 14-percent increase in government expenditure in August, 2020, including acceleration of expenditure for economic recovery,” Indrawati told the press while speaking about the state budget here on Tuesday.
The minister said the realization of government expenditure will boost economic growth in the short term, despite expectations of negative growth in the third quarter of 2020.
“The increase in government expenditure and the positive movement of the economy has indicated a significant recovery. The (expenditure) realization will continue to be expedited and is expected to bolster growth in the third quarter,” Indrawati explained.
However, the minister admitted that government consumption expenditure has not yet fully propped up economic growth as household consumption, investment, and export are yet to recover completely.
“Our economic activities have improved and need to be maintained by implementing the health protocols. Fiscal instruments will continue to support the policy on the health sector as well as economic recovery and public protection,” Indrawati added.
The minister also revised Indonesia's economic growth projection for 2020 from the previous range of minus 1.1 percent to 0.2 percent to a range of minus 1.7 percent to minus 0.6 percent.
"The only expenditure component that would still have a positive contribution to Indonesia's economy by the end of 2020 is government consumption, which is expected to grow by 0.6 percent to 4.8 percent,” she said.
While household consumption by the end of 2020 is expected to record a negative growth of minus 2.1 percent to minus 1 percent, gross fixed capital formation (PMTB) is expected to contract 5.6-4.4 percent, and exports by 9-5.5 percent.
Under such circumstances, it is almost certain that Indonesia will fall into a recession or see negative growth, like other countries impacted by the COVID-19 pandemic. (INE)
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